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Monday
May132013

California Man Guilty in $250 Million Ponzi Scheme

A federal jury has returned a guilty verdict against a California man for masterminding a massive Ponzi scheme that bilked investors out of over $250 million.  James Stanley Koenig, 60, was found guilty of all but one of the three dozen criminal charges levied against him by prosecutors.  Koenig will remain in custody until his June 11, 2013 sentencing, and could receive a sentence of up to 50 years in prison.

Koenig ran Asset & Real Estate Investment Company ("AREI") along with fifty affiliated companies, telling potential investors that it specialized in senior housing centers.  Beginning in 1997, AREI controlled more than twenty senior housing and residential assisted-living centers, representing that they were suitable as a secure and profitable vehicle for tax-sheltered property exchanges.  After purchasing an assisted living facility, Koenig would then sell ownership shares in the property to investors.  Eventually, more than 1,000 victims would invest hundreds of millions of dollars with Koenig.

However, while Koenig represented that investor funds and facility revenues were reinvested back into the facilities, this was not the case.  Instead, Koenig used investor funds to to pay returns to existing investors, as well as finance a luxury lifestyle enjoyed by himself and two co-conspirators.  This lifestyle included an 80-acre castle estate, a Lear jet, luxury homes and fancy cars.  

While investigators charged that AREI was insolvent no later than May 2007, Koenig continued to bring in new investors based on promises of false profitability.  After an investigation, criminal authorities arrested Koenig in 2009 and charged him with 77 criminal charges - 40 counts of securities fraud and 37 counts of residential burglary that were predicated on Koenig's entry into investor homes to induce them to invest in his scheme.  Investor losses were estimated at over $200 million.

According to authorities, Koenig failed to disclose to investors that he had a previous 1986 conviction stemming from his role in a gold-selling scam.  He served two years in federal prison and was ordered to pay over $5 million in restitution to defrauded investors. 

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Reader Comments (6)

The Investors are getting some Justice but the seniors that lived in the senior living facilities that Koenig and crew destroyed are getting not Justice. Over a dozen of the senior living facilities closed after they were financially raped. The remaining senior living facilities went to the investors and they attempted to recover their bad investments. The investors/owners desperately attempt to keep the senior living properties in operation by doing many questionable and illegal activities.

We lived in one such property in Peoria, Arizona called Sun Grove Resort Village (SGRV). The 20 owners allowed the 2005 Medicare Fraud Felon Scott Green to operate SGRV by using False Advertising, Baseless Lawsuits, Withholding Essential Services, and Elder Abuse/Fraud. We have reported the SGRV crimes on our Facebook "Mark Fairall" and now we are gathering information on the other AREI/OAKDALE HEIGHTS properties that were managed by Seniority, Inc. and The American Baptist Homes of the West (ABHOW). We have asked Congress and President Obama to have a SYSTEMIC INVESTIGATION done. The focus of the investigation is to verify the dangerous living conditions of the senior living facilities, to stop the usage of false and misleading advertising of the senior living facilities, and to verify and stop the usage of felons to manage and work in the senior living facilities.

James S. Koenig was a thief but the Investors/Owners were and are elder abusers, senior financial exploitation criminals, and murders. We saw 58 senior abuse cases and 33 of those seniors have died. That includes the death of my 94-year old aunt, Catherine Reinertson, and the impending death of my wife Carol. SGRV's felon Scott Green refused to fix the mold in our SGRV apartment in retaliation to our filing formal complaints with the authorities. He even attempted to murder her by stopping the delivery of her anti-rejection medication. Carol will soon die because she is now being hospitalized because her rejection blood work shows it is fourteen times higher than normal. Our three dogs passed away due to liver cancer caused by the toxic mold at SGRV.

The SGRV management company Seniority Inc. was so impressed with Scott Green's performance that he was named Executive Director of the year in 2009-2010. The felon Scott Green was fired on 08/28/12 because the SGRV caught him embezzling funds from SGRV. Since Arizona Law Enforcement does nothing this has been reported to the FBI, IC3, Department of Justice, Senators Jeff Flake and John McCain, the US Senate Special Committee on Aging, and President Barack Obama.

May 14, 2013 | Unregistered CommenterMark Fairall

A couple of things are unclear in this article. When it says, "While investigators charged that AREI was insolvent no later than May 2007, Koenig continued to bring in new investors based on promises of false profitability", does this really mean that AREI was insolvent until May 2007? What happened in May 2007 that improved the financial situation? Don't Ponzi scheme's financial situations generally become worse over time?

Also puzzling is "37 counts of residential burglary that were predicated on Koenig's entry into investor homes to induce them to invest in his scheme." How would burglarizing someone's home induce them to invest?

May 19, 2013 | Unregistered CommenterTad Cook

Mark Fairall is a deranged drug addict who was hospitalized for drug abuse. He is a paranoid delusional nutjob stalker who thinks everyone is conspiring against him and his alcoholic wife. Don't be fooled...his wife ruined her liver by drinking hard alcohol all her life. He is a slob of a sexual deviant who made countless advances toward many elderly women at Sun Grove Resort Village and scared them. This is well documented. He is a vexatious litigant and preys on the elderly, trying to scam them out of their hard-earned retirement dollars by asking them to donate money to him so he can continue to sue innocent parties in court venues. He even has a website for this. What a filthy cockroach.

May 25, 2013 | Unregistered CommenterMick L

Mick L, You are a sad person who will not even use your whole name. Your allegations are insane. Come out of the shadows and tell the truth. You are welcome to speak to our private investigator who has confirmed our truthfulness. You are a very sad little man Scott E. Williams.

May 26, 2013 | Unregistered CommenterMark Fairall

Focus on Koenig a worm of a man. May he get justice of 50 years. Greedy is an understatement. Also an alcoholic married to life coach nut job.

June 25, 2013 | Unregistered Commentercan do

Life Coach Wife hiding assets. Koenig has hidden his $. She lives high on hog no real job and is a con herself. Has Borderline personality DO.

September 16, 2013 | Unregistered Commentercan do 2

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